24/7 Wall St. » XRX

Xerox Gives CEO Big Pay Package for Failure

Douglas A. McIntyre — Tue, 09 Apr 2013 10:30:47 +0000

The board of directors of Xerox Corp. (NYSE: XRX) gave Chairman and Chief Executive Officer Ursula M. Burns a pay package worth $13,070,245 for her 2012 performance. The figure would be good by the measure of most public company CEOs. In the case of Burns, the compensation came in exchange for a performance that was mediocre at best.

Last year, Xerox’s revenue fell 1% to $22.4 billion. Net income dropped 8% to $1.2 billion. Results for the fourth quarter were slightly worse. Revenue fell 1% to $5.9 billion. Net income was down 10% to $343 million.

The Xerox board offered its broad philosophy about how management should be paid, based on several “core principles.” According to the Xerox 10-K:

These principles are intended to motivate the named executive officers to improve the Company’s financial performance; to be personally accountable for the performance of the business units, divisions, or functions for which they are responsible; and to collectively make decisions about the Company’s business that will deliver value to shareholders over the long term.

How those principles could be applied to excuse the more than $13 million Burns made is beyond explanation or comprehension. Xerox’s financial “performance” was poor. The board has done nothing for shareholders with this package except sell them short.

Rich executive compensation has gotten a bad name over the years. The primary reason for the criticism is that CEOs are not paid for their performance. Rather, their packages are based on boards that favor the CEO’s benefits over those of shareholders.

Burn’s most recent sop to shareholders, as she described Xerox’s performance in the final quarter of 2012, was this:

“Strong growth in services and the consistent profitability of our document technology business generated significant operating cash flow and contributed to fourth-quarter earnings that met our expectations.”

Based on the company’s actual performance, those expectations are not acceptable, at least not for someone who is paid $13,070,245.

Filed under: 24/7 Wall St. Wire, Compensation, Corporate Governance Tagged: featured, XRX

Xerox’s Morale Problem

Douglas A. McIntyre — Fri, 22 Mar 2013 10:39:21 +0000

One of the largest hurdles to the Xerox Corp. (NYSE: XRX) “recovery” is the extent to which its employees hold the company and its chief executive, Ursula M. Burns, in low regard.

Two new pieces of research from jobs site Glassdoor set benchmarks for both “Best Places to Work” and “Highest Rated CEOs.” A review of the data show how far away Xerox sits from America’s top companies. The question that Glassdoor does not answer completely is why Xerox does so poorly. It is probably because the Xerox reinvention has convinced neither workers nor customers.

The rating given to the Glassdoor “Highest Rated CEOs” is more than 80% for the top 50. “Best Places to Work” scores for the top 50 companies are all 3.8 or better on a scale with the best possible rating of 5.

At the other end of the Glassdoor ratings are large companies that get approval ratings well below 3 and CEO ratings less than 40%. Xerox’s CEO Burns has a 27% approval rating, which is nearly impossible to match among the worst rated companies.

CNBC recently framed the Burns rating as somehow pertinent as she is measured against other female CEOs in the Glassdoor measures:

The only woman to make the top 50 list this year is Sharen Turney, CEO for Victoria’s Secret, a subsidiary of Limited Brands. She came in 42nd place with an 82 percent approval rating, one slot above Secretary of the Navy Ray Mabus.

As for the other female CEOs in corporate America, it’s a mixed picture. Meg Whitman of Hewlett-Packard made the top 50 list last year, but fell off this year with a 79 percent approval rating. PepsiCo’s Indra Nooyi has a 69 percent rating, and Xerox’s Ursula Burns has only a 26 percent approval rating. Ouch. Lockheed Martin’s new CEO, Marilyn Hewson, earned an 82 percent approval rating already, but she is too new to qualify for this year’s list.

The characterization trivializes the extent of the Xerox problem. Burns’s rating is so low that it is not even matched by recently sacked Sears Holdings Corp. (NASDAQ: SHLD) CEO Louis J. D’Ambrosio. He ran what is widely considered to be among the worst-run large companies in America.

What may trouble employees at Xerox is the illusion of progress that management continues to promote. People who work at the company know better. As Xerox announced full-year earnings for 2012, Burns said:

Throughout 2012, we focused on scaling our services business and adjusting our business model to align with growth opportunities in the $600 billion market we serve. Our fourth-quarter results reflect steady progress.

Actually, the results for 2012 did not reflect that at all. Revenue fell 8% to $6.6 billion. Net income dropped 8% to $1.2 billion. Those numbers do not reflect any “progress.”

If the view employees have of their CEOs rests at all with a perception that these leaders are willing to say how good or bad things are, Burns does not pass the test.

Filed under: 24/7 Wall St. Wire, Corporate Governance, Labor, Management Change, Technology Companies Tagged: featured, SHLD, XRX

The Best Dividend Hikes of the Week (KO, HFC, KMB, TXN, WMT, XRX)

Jon C. Ogg — Fri, 22 Feb 2013 20:24:13 +0000

This last week sure felt like a long week in the market, although it was only a four-day week. We saw several key dividend announcements from some great American companies. Some of the higher dividend announcements really created interest in the underlying stocks this last week. There were many other dividend hikes and announcements this last week but these are the standout dividend winners we tracked.

The Coca-Cola Company (NYSE: KO) took its dividend up yet again, proving its dividend aristocrat status. Shares are still 6% south of a 52-week high and yield was already 2.7%. Coke raised its quarterly payout by 10% to $0.28 per share per quarter and the yield is almost 3% now. Our take: Coke leads Pepsi in the dividend investor taste test, although Jim Cramer thinks Pepsi is better right now.

HollyFrontier Corporation (NYSE: HFC) might not sound like an exciting dividend on the surface, but it is. The refiner lifted its payout a sharp 50% to $0.30 per share as the fifth increase in the regular dividend since the merger in July 2011. It also announced a special cash dividend of $0.50 per share and that was the 8th special dividend since August 2011. If you combine the common and special payouts as a norm, the yield is 5.7% announalized. Otherwise the yield is closer to 2.2%.

Kimberly-Clark Corp. (NYSE: KMB) just put more pressure on its consumer products peers to raise their quarterly payouts. It increased its dividend payout by about one-tenth even when its shares were already at all-time highs. The 3.2% yield was already high, but now that will be a 3.5% yield for investors who want to chase the stock with new money.

Texas Instruments Inc. (NASDAQ: TXN) is magically back up to within 1% a 52-week high. The company added $5 billion to its stock buyback plan (against a $37 billion market cap) and the dividend was raised by one-third to $0.28 from $0.21 per share per quarter. TI’s yield was already good at 2.5% and now that will be about 3.2%. A near 5% gain was hard to ignore in the stock price.

Wal-Mart Stores Inc. (NYSE: WMT) had earnings which were disappointing when you look at guidance and low same-store sales. The blame: payroll tax and delayed tax refunds. What bailed Wal-Mart out of a bad week was an 18% dividend hike to $1.88 on an annualized basis. The world’s largest retailer was paying almost 2.3% for a dividend yield but that is now going to be right at 2.7%.

Xerox Corporation (NYSE: XRX) is a boring “technology” play that we might just consider an office products play now. A dividend of $0.575 does not sound that high until you consider that the stock was under $8.00 at the time. This represents a gain of more than one-third and the new yield is just under 3% at $2.92%. Argus liked it enough to spend the hours required to write a two-page “reiterated buy” rating and the call sent shares up 3% Friday because the price target of $13 on the stock implies more than 50% upside for investors. This was the first dividend hike in years.

We would like to end with a list of the top dividend stocks held in the Warren Buffett and Berkshire Hathaway portfolio.

Filed under: 24/7 Wall St. Wire, Corporate Governance, Dividends & Buybacks, Stock Buybacks, Stock Splits Tagged: featured, HFC, KMB, KO, TXN, WMT, XRX

Top Analyst Upgrades and Downgrades (ALU, MT, BBRY, BIP, BG, CAT, FSLR, GOV, HPQ, HD, ISRG, MCD, MDT, RFMD, S, TASR, TNK, PAY, VVUS, WEN, XRX, AGU, CF, MOS, POT, RNF)

Jon C. Ogg — Fri, 22 Feb 2013 13:30:13 +0000

These are some of this Friday’s top analyst upgrades, downgrades and initiations seen from Wall St. research calls.

Alcatel-Lucent S.A. (NYSE: ALU) was given positive comments on its new CEO but the stock was maintained a Sell as a low value asset at Goldman Sachs.

ArcelorMittal (NYSE: MT) raised to Neutral at HSBC.

BlackBerry (NASDAQ: BBRY) cut to Sell from Neutral at MKM Partners.

Brookfield Infrastructure Partners L.P. (NYSE: BIP) named Bull of the Day at Zacks as the “high quality, diversified assets will continue to produce solid and consistent cash flows.”

Bunge Ltd. (NYSE: BG) was named by Zacks as the Bear of the Day and the firm said that bitter results for the recent quarter indicate more troubles ahead.

Caterpillar Inc. (NYSE: CAT) raised to Outperform at Raymond James.

First Solar Inc. (NASDAQ: FSLR) cut to Underperform at Pac-Crest.

Government Properties Income Trust (NYSE: GOV) cut to Sector Perform from Outperform at RBC.

Hewlett-Packard Co. (NYSE: HPQ) raised to Neutral from Sell with $19 target at UBS and maintained Neutral but raised target price to $20 from $12 at Credit Suisse.

The Home Depot Inc. (NYSE: HD) raised to Outperform and target raised to $76 from $67 at Oppenheimer (full summary).

Intuitive Surgical Inc. (NASDAQ: ISRG) raised to Buy at Goldman Sachs.

McDonald’s Corp. (NYSE: MCD) reiterated Outperform and raised target $2 to $104 at Credit Suisse.

Medtronic Inc. (NYSE: MDT) reiterated Buy and raised target by $6 to $54 at Argus.

RF Micro Devices Inc. (NASDAQ: RFMD) raised to Buy at Lazard and cut to Market Perform at Raymond James last night.

Sprint Nextel Corp. (NYSE: S) reiterated Buy with $7.50 price target at Argus as trading falls below Softbank offer price (full report summary).

TASER International Inc. (NASDAQ: TASR) raised to Overweight at J.P. Morgan.

Teekay Tankers Ltd. (NYSE: TNK) cut to Market Perform at Wells Fargo.

VeriFone Systems Inc. (NYSE: PAY) cut to Hold at Argus after many downgrades and implosion yesterday.

Vivus Inc. (NASDAQ: VVUS) maintained Buy but lowered price target to $26 from $30 at BofA/Merrill Lynch after Qsiva denied approval in Europe.

The Wendy’s Co. (NASDAQ: WEN) cut to Underperform from Neutral at Credit Suisse.

Xerox Corp. (NYSE: XRX) reiterated Buy with $13 price target at Argus.

Dahlman Rose trimmed potash and fertilizer stock ratings: Agrium (NYSE: AGU) cut to Sell, CF Industries (NYSE: CF) cut to Sell, Mosaic Co. (NYSE: MOS) cut to Hold, Potash Corp. of Saskatchewan (NYSE: POT) cut to Sell and Rentech Nitrogen Partners L.P. (NYSE: RNF) cut to Sell.

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: AGU, ALU, BBRY, BG, BIP, CAT, CF, FSLR, GOV, HD, HPQ, ISRG, MCD, MDT, MOS, MT, PAY, POT, RFMD, RNF, S, TASR, TNK, VVUS, WEN, XRX

Xerox Continues Its Wearied Trip Sideways

Douglas A. McIntyre — Wed, 20 Feb 2013 11:16:50 +0000

Xerox Corp. (NYSE: XRX) has become one of those ancient tech companies, not entirely unlike Dell Inc. (NASDAQ: DELL), that has overstayed its welcome in the market, as it struggles against much larger, more well-funded and more innovative companies. It is time for the Xerox board to consider its options to get some money back to shareholders, either through a sale of the company or its assets, or via a leveraged buyout.

The proof of investor disappointment in Xerox is it share price. Over the past year, it is off slightly, while the S&P 500 is up 12%. Over a period of two years, the stock is down 30%. The cause of each result is the Xerox financials. Revenue in 2012 dropped 1% to $22.4 billion, but net income fell 8% to $1.2 billion. Ursula Burns, Xerox’s chairman and chief executive officer, commented:

Strong growth in services and the consistent profitability of our document technology business generated significant operating cash flow and contributed to fourth-quarter earnings that met our expectations. Throughout 2012, we focused on scaling our services business and adjusting our business model to align with growth opportunities in the $600 billion market we serve. Our fourth-quarter results reflect steady progress. We increased our services segment margin by 0.9 points while growing business process outsourcing revenue by 8 percent, IT outsourcing by 15 percent and document outsourcing by 2 percent. In document technology, our fourth-quarter segment margin of 12.3 percent improved, reflecting effective execution in reducing our cost base and maximizing profitability.

Of course, a quick look at Xerox earnings does not support her optimism at all.

Xerox, under Burns, has proved to be one of those tech companies that has worn out its welcome in the market. “For more than a half a century, Xerox has been a leader in document technology and services,” the Xerox public relations staff wrote recently. Toward the end of that half a century, Xerox has produced commodity products and services. Only the rare outsider from Wall St. or the experts who keep track of the world’s great tech companies believes otherwise. It is time for Xerox to find a better way to serve its shareholders, who would like to get some of their money back.

Filed under: Corporate Governance, Shareholder Issues, Technology Companies Tagged: DELL, featured, XRX

24/7 Wall St. Closing Bell — January 24, 2013: Markets Mixed After Apple Earnings (AAPL, PG, EMR, CVS, GOLD, TIF, AMGN, SNDK, FFIV, NE, NVR, WDC, MMM, BMY, LMT, RTN, LUV, UNP, UAL, XRX, T, JNPR, MSFT, SBUX, HAL, HON, KMB, WY, NOK, NFLX, SWFT)

Paul Ausick — Thu, 24 Jan 2013 21:05:41 +0000

U.S. equity markets opened mixed this morning with the DJIA and the S&P 500 higher, and the Nasdaq lower, dragged down by concern over the earnings of Apple Inc. (NASDAQ: AAPL) (more coverage here). Apple’s troubles, though, may be traced more accurately to options trading (more coverage here). In Europe, preliminary PMI readings were better if still not positive (more coverage here). Unemployment levels in Spain reached an all-time high (more coverage here). In Asia Chinese PMI came in higher than expected (more coverage here) and Japan’s trade deficit was wider than expected. In the U.S., new claims for unemployment benefits fell sharply (more coverage here). The S&P 500 briefly topped 1,500 this morning for the first time in more than five years.

The U.S. dollar index rose 0.02% today, now at 79.941. The GSCI commodity index is down 0.3% at 661.98, with commodities prices mixed again today. WTI crude oil closed up 0.8% today, at $95.95 a barrel following a rise in crude stocks (more coverage here). Brent crude trades up 0.5% at $113.28 a barrel. Natural gas is down 2.8% today at about $3.45 per million BTUs after this week’s storage report (more coverage here). Gold settled down 1% today at $1,669.90 an ounce.

The unofficial closing bells put the DJIA up 46 points to 13,825.33 (0.33%), the NASDAQ fell more than 23 points (-0.74%) to 3,130.38, and the S&P 500 was flat at 1,494.82.

There were a several analyst upgrades and downgrades today, including Procter & Gamble (NYSE: PG) started as ‘neutral’ at Credit Suisse; Emerson Electric Co. (NYSE: EMR) raised to ‘buy’ at Deutsche Bank; CVS Caremark Corp. (NYSE: CVS) removed from U.S. Focus List at Goldman Sachs; Randgold Resources Ltd. (NASDAQ: GOLD) raised to ‘buy’ at BofA/ML; and Tiffany & Co. (NYSE: TIF) cut to ‘hold’ at Canaccord Genuity.

Earnings reports since markets closed last Friday resulted in several price moves today, including these: Apple Inc. (NASDAQ: AAPL) is down 12% at $452.53 (more coverage here); Amgen Corp. (NASDAQ: AMGN) is down 0.5% at $82.63; SanDisk Corp. (NASDAQ: SNDK) is up 3.2% at $49.19 (more coverage here); F5 Networks Inc. (NASDAQ: FFIV) is up 4.9% at $103.60; Noble Corp. (NYSE: NE) is down 5.4% at $37.70; NVR Inc. (NYSE: NVR) is up 2% at $1,001.58 after posting a new 52-week high of $1,023.99 earlier today; Western Digital Corp. (NASDAQ: WDC) is up 2.2% at $48.08 after posting a new 52-week high of $49.42 earlier today; 3M Corp. (NYSE: MMM) is up 0.2% at $99.68 after posting a new 52-week high of $99.80 earlier today (more coverage here); Bristol-Myers Squibb Co. (NYSE: BMY) is up 2.6% at $35.82; Lockheed Martin Corp. (NYSE: LMT) is down 2.6% at $93.56; Raytheon Inc. (NYSE: RTN) is down 3% at $56.49; Southwest Airlines Co. (NYSE: LUV) is up 0.9% at $11.46 after posting a new 52-week high of $11.62 earlier today (more coverage here); Union Pacific Corp. (NYSE: UNP) is down 0.7% at $134.35; United Continental Holdings Inc. (NYSE: UAL) is up 1.3% at $25.33 after posting a new 52-week high of 26.36 earlier today; and Xerox Corp. (NYSE: XRX) is up 2.6% at $7.78.

After markets close today and before they open tomorrow morning we are scheduled to hear from AT&T Inc. (NYSE: T), Juniper Networks Inc. (NASDAQ: JNPR), Microsoft Corp. (NASDAQ: MSFT), Starbucks Corp. (NASDAQ: SBUX), Halliburton Co. (NYSE: HAL), Honeywell International Inc. (NYSE: HON), Kimberly-Clark Corp. (NYSE: KMB), and Weyerhaeuser Corp. (NYSE: WY).

Some standouts from today include the following stocks:

Nokia Corp. (NYSE: NOK) is down 8.7% today at $4.24. The mobile handset maker posted earnings that were better than expected, but the outlook is weak. More coverage here.

Netflix Inc. (NASDAQ: NFLX) is up 42.5% at $147.16 after posting a new 52-week high of $149.17 earlier today. The video distribution firm posted much better earnings than expected and grew subscriber numbers significantly. More coverage here.

Swift Transportation Co. (NYSE: SWFT) is up 28.7% at $13.16 after posting a new 52-week high of $13.24 earlier today. The trucking company posted strong earnings last night.

Stay tuned for Friday. We have noted the following event on the schedule (all times Eastern):

10:00 a.m. – New home sales

Filed under: 24/7 Wall St. Wire, HI/LOW, Market Close Tagged: AAPL, AMGN, BMY, CVS, EMR, FFIV, gold, HAL, HON, JNPR, KMB, LMT, LUV, MMM, MSFT, NE, NFLX, NOK, NVR, PG, RTN, SBUX, SNDK, SWFT, T, TIF, UAL, UNP, WDC, WY, XRX

24/7 Wall St. Closing Bell — January 23, 2013: Market Open Higher on Little News (COST, GE, VZ, F, INCY, AMD, CSX, GOOG, IBM, IGT, TXN, ABT, BHI, COH, GD, MCD, LCC, AAPL, AMGN, NFLX, SNDK, FFIV, NE, NVR, WDC, MMM, BMY, LMT, RYN, LUV, UNP, UAL, XRX, MAPP, AGN, NMRX, MCP)

Paul Ausick — Wed, 23 Jan 2013 21:05:02 +0000

U.S. equity markets opened higher this morning following a string of solid earnings reports yesterday and after markets closed last night. As we note below, earnings results were more mixed today, but shares held on to their opening gains throughout the day. In Asia, some investors are disappointed in Japan’s easy money decision and the only data point of note came from Australia, where the consumer price index rose just 0.2% quarter-over-quarter. In Europe, British Prime Minister David Cameron has promised a referendum on the country’s European Union membership by 2017 (provided he’s still in office). In the U.S., the U.S. House of Representatives pushed a decision on the debt ceiling out until May, but two other critical deadlines face the Congress in March (more coverage here).

The U.S. dollar index rose 0.08% today, now at 79.939. The GSCI commodity index is up 0.5% at 664.07, with commodities prices mixed today. WTI crude oil closed down 1.5% today, at $95.23 a barrel. Brent crude trades up 0.4% at $110.61 a barrel. Natural gas is flat today at about $3.56 per million BTUs. Gold settled down 0.4% today at $1,686.70 an ounce.

The unofficial closing bells put the DJIA up nearly 67 points to 13,779.10 (0.49%), the NASDAQ rose nearly 11 points (0.33%) to 3,153.67, and the S&P 500 rose 0.15% or about 2 points to 1,494.78.

There were a several analyst upgrades and downgrades today, including Costco Wholesale Corp. (NASDAQ: COST) raised to ‘market perform’ at Bernstein; General Electric Co. (NYSE: GE) reiterated as ‘buy’ with a price target of $25 at Argus; Verizon Communications Inc. (NYSE: VZ) raised to ‘buy’ with a price target of $50 at Canaccord Genuity; Ford Motor Co. (NYSE: F) cut to ‘hold’ and price target raised to $15 at Deutsche Bank; and Incyte Corp. (NASDAQ: INCY) cut to ‘underweight’ at Morgan Stanley.

Earnings reports since markets closed last Friday resulted in several price moves today, including these: Advanced Micro Devices Inc. (NYSE: AMD) is up 11.4% at $2.73 (more coverage here); CSX Corp. (NYSE: CSX) is up 4.2% at $21.68 (more coverage here); Google Inc. (NASDAQ: GOOG) is up 5.9% at $744.27 (more coverage here); International Business Machines Corp. (NYSE: IBM) is up 4.8% at $205.57 (more coverage here); International Game Technology Inc. (NYSE: IGT) is down 1.8% at $14.94; Texas Instruments Inc. (NASDAQ: TXN) is down 0.9% at $33.15; Abbott Laboratories (NYSE: ABT) is down 0.3% at $32.80; Baker Hughes Inc. (NYSE: BHI) is up 0.9% at $45.23 (more coverage here); Coach Inc. (NYSE: COH) is down 16.3% at $50.80 (more coverage here); General Dynamics Corp. (NYSE: GD) is up 0.8% at $71.28; McDonald’s Corp. (NYSE: MCD) is up 0.5% at $93.44 (more coverage here); and U.S. Airways Group Inc. (NYSE: LCC) is up 1.7% at $15.10 after posting a new 52-week high of $15.64 earlier today (more coverage here).

After markets close today and before they open tomorrow morning we are scheduled to hear from Apple Inc. (NASDAQ: AAPL), Amgen Corp. (NASDAQ: AMGN), Netflix Inc. (NASDAQ: NFLX), SanDisk Corp. (NASDAQ: SNDK), F5 Networks Inc. (NASDAQ: FFIV), Noble Corp. (NYSE: NE), NVR Inc. (NYSE: NVR), Western Digital Corp. (NYSE: WDC), 3M Corp. (NYSE: MMM), Bristol-Myers Squibb Co. (NYSE: BMY), Lockheed Martin Corp. (NYSE: LMT), Raytheon Inc. (NYSE: RYN), Southwest Airlines Co. (NYSE: LUV), Union Pacific Corp. (NYSE: UNP), United Continental Holdings Inc. (NYSE: UAL), and Xerox Corp. (NYSE: XRX).

Some standouts from today include the following stocks:

MAP Pharmaceuticals Inc. (NASDAQ: MAPP) is up 58.7% today at $24.73 after posting a new 52-week high of $24.77 earlier. The developmental drug maker is being acquired by Allergan Inc. (NYSE: AGN) for about $958 million, or $25 a share.

Numerex Corp. (NASDAQ: NMRX) is down 14.3% at $11.67. The machine-to-machine technology firm priced a secondary offering at a 17% discount to last night’s closing price.

Molycorp Inc. (NYSE: MCP) is down 11.4% at $7.82. The rare earths miner issued an earnings warning this morning and proposed to raise a total of $300 million by selling stock and issuing debt. More coverage here.

Stay tuned for Thursday. We have noted the following events on the schedule (all times Eastern):

8:30 a.m. – New claims for unemployment benefits
8:58 a.m. – Flash PMI manufacturing index
10:00 a.m. – Leading indicators
10:30 a.m. – EIA weekly natural gas storage report
11:00 a.m. – EIA weekly petroleum status report
11:00 a.m. – Kansas City Fed manufacturing index
1:00 p.m. – 10-year Treasury Inflation-Protected Securities (TIPS) auction
4:30 p.m. – Fed balance sheet and money supply

Filed under: 24/7 Wall St. Wire, HI/LOW, Market Close Tagged: AAPL, ABT, AGN, AMD, AMGN, BHI, BMY, COH, COST, CSX, F, FFIV, GD, GE, GOOG, IBM, IGT, INCY, LCC, LMT, LUV, MAPP, MCD, MCP, MMM, NE, NFLX, NMRX, NVR, RYN, SNDK, TXN, UAL, UNP, VZ, WDC, XRX

If Dell Is Buyout Bait… 7 Other Big Old-School Tech Stocks Under 10-Times Earnings

Jon C. Ogg — Mon, 14 Jan 2013 20:06:11 +0000

Dell Inc. (NASDAQ: DELL) has seen its shares rise handily on Monday on news (rumors really) that the company might be in talks with private equity firms in a possible go-private transaction. All we can say other than that we have heard this before is that if Dell can snag a private equity buyout, you can count on Wall Street to come out with the WHO GETS BOUGHT NEXT questionnaires. With Dell trading at under 8-times projected earnings and a $19 billion market cap even after the big pop today, there are a few others to consider. Logic needs to be considered because the size alone on most of these companies would make such deals ver difficult. That being said, investors looking for cause and effect trades rarely let the facts get in the way of a good story.

Here are several other great tech stocks trading at less than 10-times earnings. We have added color and size on each.

Seagate Technology PLC (NASDAQ: STX) is worth about $12.5 billion and trades at about 6.5-times projected earnings. Rival Western Digital Corporation (NASDAQ: WDC) is worth almost $11 billion and trades at just under 6-times this year’s expected earnings. Both stocks have recovered to be within a couple percent of their respective 52-week highs. Both Seagate and Western Digital now trade above their consensus analyst price targets.

Corning Inc. (NYSE: GLW) is yet another discounted value technology stock. At $12.51, its stock is worth about $18.5 billion and trades at about 10-times current earnings and it trades at about 9.4-times this year’s expected earnings. The consensus target price is $14.52 for this stock on its own.

Don’t forget about the down and out Hewlett-Packard Co. (NYSE: HPQ). This seems ridiculous on the surface as a buyout with a $33 billion market value considering that this has lost half its value from the peak of 2012 and this was a $50 stock in 2010 before the woes began. HP trades over the consensus price targets and it was featured in our own most overvalued DJIA stocks for 2013. Despite the size, it trades at just over 5-times its expected earnings. If a $20+ billion Dell deal is hard to fathom in dollar terms, imagine a $30 billion to $40 billion deal being put together. AND, don’t hold your breath!

Is Xerox Corporation (NYSE: XRX) even a technology stock any longer? It depends upon whom you ask. Xerox trades under $7.50 and is worth $9.4 billion in market cap. Keep in mind that it just lost its CFO who left to join Apple. Xerox trades at about 7-times this year’s earnings estimates. We would note that the consensus price target here is only $7.50 by analysts.

Microsoft Corporation (NASDAQ: MSFT) is too big to buy for anyone. With a market value of $227 billion after shares were stuck in the mud forever, even if Bill Gates and Warren Buffett somehow decided that they wanted to take the software giant private i would be virtually impossible due to the raw dollar size. This trades at 9.4-times this year’s expected earnings and 8.5-times next year’s expected earnings. At least there is some $60 billion or $70 billion in cash and liquid assets that could be deducted rom the purchase price but this would be a buyout of only fantasy. Processing giant Intel Corporation (NASDAQ: INTC) is worth barely over 10-times forward earnings now that its shares have recovered enough in the last two or three weeks. Microsoft was recently featured in our cheapest DJIA stocks as the DJIA is headed for 14,590 this year.

Will ANY of these secondary deals occur if Dell is acquired? It would seem unlikely, but anything has to be considered as at least possible. We don’t think these are acquirable companies as they stand today nor as they stand tomorrow due to the size of the raw dollars involved. That being said, stay tuned.

Filed under: 24/7 Wall St. Wire, Consumer Electronics, Corporate Governance, Cult Stock, Mergers & Acquisitions, Mergers and Buy Outs, Private Equity, Rumors, Semiconductor, Technology, Technology Companies, Telecom & Wireless Tagged: DELL, featured, GLW, HPQ, INTC, MSFT, STX, WDC, XRX

Large Company Female CEOs Face Headwinds

Douglas A. — Fri, 07 Dec 2012 02:18:49 +0000

The stock prices of the majority of large public companies led by female CEOs have underperformed the S&P 500 so far this year, in some cases by a great deal. While some may use this data to say that women should not run large corporations, a closer analysis shows that companies are neither harmed, nor helped, by the gender of their leaders. Female CEOs face the same challenges as their male counterparts. Some have been extremely poor stewards of their companies and have posted sub-par performances. Others are excellent executives who are rewarded by good stock performance. Still others have done produced superior financial results, but at companies that are in deeply troubled sectors of the economy. 24/7 Wall St. examined the Fortune 500 companies run by female executives and reviewed their CEOs’ performances.

Read: Large Company Female CEOs Face Headwinds

At the start of 2012, there were 11 public companies with sales in excess of $10 billion that were run by women. One, Angela F. Braly of Wellpoint Inc. (NYSE: WLP), was pushed out of her job — as often happens to CEOs. Another, Irene Rosenfeld, ran Kraft, which was broken into two public companies. Rosenfeld continues to run one of those, Mondelēz International Inc. (NASDAQ: MDLZ). We didn’t include these two CEOs in our analysis.

A review of the performance of these female CEOs might cause some people to believe their performances argue for or against the promotion of more women to the chief executive’s office. Research firms, led by Catalyst, have pressed for an increase in the number of female senior managers and board members at large public companies, based on the idea that women are just as qualified to do these jobs as men are. Whether a current female CEO has done poorly or well bears no relationship to the Catalyst case. Success or lack thereof among the small group reviewed here has nothing to do with the overall qualifications of women to hold senior corporate job.

Another argument that could be derived from the presence of female CEOs is that if women have can hold the highest level jobs in corporate America then all women should be treated the same as their male equivalents. Women have been paid less than men for similar work since records on the matter have been kept. The justification of equal pay should be based on merit, and while that merit is obvious, it has no relationship to the job performances of a small sample of CEOs who are extremely successful financially.

The last argument that some make about the sometimes limited success of women in chief executive roles and their small presence at large companies is that women’s careers are hurt when they decide to leave their jobs temporarily to have children. The widely discussed comments by famed former GE CEO Jack Welch to this effect cannot be proved one way or another, or at least have not been. The nine female CEOs on this list are too small a sample to be a reasonable litmus test about the relationship between family and success

The stock prices of seven the nine companies run by these female CEOs run have underperformed the market. The S&P 500 is up 14% year to date. Seven out of nine is a high percentage. But there is no evidence that poor management by female CEOs is to blame. Some of the chief executives on this list have nearly ruined their companies. Ursula Burns of Xerox and Meg Whitman of Hewlett-Packard lead that list. Others have performed extraordinarily well, whether their stocks reflect it or not. Included among those are Carol Meyrowitz of retailer TJX and Patricia Woertz of ADM. On those scales, they have done no better, or worse, than most of their male counterparts.

Filed under: Corporate Governance, Management Change, Special Report Tagged: ADM, AVP, DD, featured, HPQ, IBM, MDLZ, PEP, SRE, TJX, WLP, XRX

Many Big Share Buyback Plans in November (BP, GME, LTD, MNST, NTAP, ORLY, OSK, PG, SBUX, XRX, VRX, YUM)

Jon C. Ogg — Mon, 19 Nov 2012 13:54:32 +0000

In the most recent trading days, we have seen more companies turn to new or expanded share buyback plans. If the dividend tax rates rise too much, corporations may ditch the endless dividend hikes in favor of more share buybacks to garner higher earnings per share and to buy up the excess float. These are some of the key buybacks we have tracked in the past few trading days.

BP PLC (NYSE: BP) is reportedly allocating the equivalent of almost $6 billion to its buyback plan due to cash on hand and due to weakness persisting since the Gulf of Mexico disaster in 2012. Its market cap is about $127 billion.

GameStop Corp. (NYSE: GME) managed to climb during a weak market last week as big video games are back. The video game retailer also went ahead and set a new $500 million share buyback plan.

Limited Brands Inc. (NYSE: LTD) beat earnings last week and it also set a $250 million share buyback plan. That is pretty small against a $13+ billion market cap.

Monster Beverage Corp. (NASDAQ: MNST) has seen shares hit hard over drink safety concerns. Last week’s $250 million share buyback plan compares to a market cap of more than $7.7 billion.

NetApp Inc. (NASDAQ: NTAP) beat earnings last week and announced that it would expand its share buyback plan by another $1.5 billion.

O’Reilly Automotive Inc. (NASDAQ: ORLY) boosted its share buyback plan by some $500 million last week. This compares to a market cap of $10.3 billion.

Oshkosh Corp. (NYSE: OSK) allocated $300 million that can be used to buy back its common stock over the next 12 to 18 months. Oshkosh has a market cap of about $2.5 billion.

Procter & Gamble (NYSE: PG) recently held its analyst day, and it announced that it would boost its share buybacks by 50% in 2013. That is now $6 billion based on the hike, and the company said it could increase that if its cash flow increases.

Starbucks Corp. (NASDAQ: SBUX) added another $1.2 billion to its share repurchase plan, or about 25 million shares. Starbucks has a market cap of $36.5 billion.

Xerox Corp. (NYSE: XRX) may have had its CEO meet with the Obama administration last week, but the company also increased its share buyback plan by $1 billion as well. Xerox has a market cap of $7.9 billion.

Valeant Pharmaceuticals International Inc. (NYSE: VRX) just announced a new $1.5 billion securities repurchase program. This is not just for common shares, as the company included senior notes and other debt in the buyback. Its market cap is $16.7 billion.

Yum! Brands Inc. (NYSE: YUM) approved a new $1 billion share buyback, versus a market cap of about $32.5 billion.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Corporate Governance, Dividends & Buybacks Tagged: BP, GME, LTD, MNST, NTAP, ORLY, OSK, PG, SBUX, VRX, XRX, YUM